public blockchain</strong></a> stakeholders challenge one another for control by trying to persuade the majority to join and promote their cause. Thus it has similarities with how politics work in real life. Stakeholders promote their interests via collaboration platforms like social media and forums, or during events, conferences, and other gatherings.</p>\n<p>Off-chain governance network tries to consider everyone&rsquo;s interests, but the power of decision-making mostly fluctuates between the core development team members and miners.</p>\n<p>The most popular blockchain platforms like <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-bitcoin-btc/">Bitcoin or <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-ethereum-eth/">Ethereum use their own off-chain governance variation. For example, Bitcoin users don&rsquo;t receive any inherent voting rights just by owning BTC since Bitcoin hasn&rsquo;t introduced an on-chain governance network or governance tokens. The possession of BTC can only do so much, such as make your voice heard in off-chain conversations.</p>\n<p>Moreover, it doesn&rsquo;t matter how many blocks a Bitcoin miner has verified, that mining power does not translate to governance power. It&rsquo;s important to note that no matter what hash rate percentage you reach when mining, you won&rsquo;t be rewarded with governance rights. Your responsibility for verifying and adding transactions to the blockchain always stays the same just like the type of rewards you receive.</p>\n<p>Before any major changes are implemented within Bitcoin or Ethereum, the proposal is discussed by the crucial members of the platform. They include the members of the core development team, miners, researchers, and end-users. In addition, Bitcoin allows anyone to attend its core development team&rsquo;s online meetings.</p>\n<p>Ethereum also governs its platform in a similar fashion as Bitcoin. <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/who-is-vitalik-buterin/">Vitalik Buterin</strong></strong></a> who is often considered the crypto hero is in charge of the core development team of Ethereum.&nbsp;</p>\n<p>The process of making important decisions off-chain starts much as it does <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-on-chain/">on-chain. &nbsp;The core development team brings forward a formal proposal for implementing new code like <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-bitcoin-improvement-proposal-bip/">Bitcoin improvement proposal (BIP)</strong></a> or <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-ethereum-improvement-proposal-eip/">Ethereum improvement proposal (EIP)</strong></a> which basically are improvement suggestions. In the latter cases, they&rsquo;re held in the project&rsquo;s official repository on Microsoft or GitHub.</p>\n<p>Then stakeholders come together to discuss the proposal and express their approval or disapproval of it. It&rsquo;s much like <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-game-theory/">game theory</strong></a>.&nbsp;</p>\n<p>Node operators, also known as <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-validator/">validators, and <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-miner/">miners are consulted to find out whether they approve of upgrading the software. If everyone approves, then the code is implemented without a hassle. Although it almost never goes that smoothly.&nbsp;</p>\n<p>Each major update is announced in advance in order to keep the developers and stakeholders on the same page.</p>\n<p>Now, in case of disagreement between stakeholders, there are two possible courses of action:</p>\n<ul>\n<li>Try to change the opinion of stakeholders by using&nbsp;persuasion techniques to bring the other stakeholders around;</li>\n<li>Don&rsquo;t try to change the stakeholders' opinions. Instead, enforce the <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-hard-fork-blockchain/">hard fork</strong></a> protocol. This way they&rsquo;re able to make relevant and agreed-upon changes.</li>\n</ul>","level":"medium","meta_title":"What is Off-Chain Governance? 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Investing","slug":"trading-and-investing","updated":null,"chapter":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters/learn-crypto-trading.jpg","chapter_simple":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters-simple/crypto-trading-101.jpg","rating":80,"sections":[{"slug":"where-to-trade-crypto","title":"Where Can You Trade Cryptocurrencies?","featured_image_id":10342,"status":"published","chapter_id":7,"language":"en","order":1,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/where-to-trade-crypto","featured_image":{"id":10342,"uuid":"0bd8d78a-9423-48ee-9161-34dc1872b97c","public_url":"https://assets.bitdegree.org/crypto/storage/optimized/where-to-trade-crypto-featured-image.jpg","path":"crypto/storage/optimized/where-to-trade-crypto-featured-image.jpg","original_path":"crypto/storage/original/where-to-trade-crypto-featured-image.jpg","name":"where-to-trade-crypto-featured-image.jpg","original_name":"where-to-trade-crypto-featured-image.jpg","title":null,"alt":null,"width":1024,"height":576,"disk":"spaces","status":"uploaded","readable_file_size":"85.96KB"},"youtube_video":null},{"slug":"how-to-invest-in-crypto","title":"Investing in Crypto: What Investing Options Do You Have?","featured_image_id":10729,"status":"published","chapter_id":7,"language":"en","order":2,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/how-to-invest-in-crypto","featured_image":{"id":10729,"uuid":"3439a1db-9892-404a-b4b6-a1db5a34bca4","public_url":"https://assets.bitdegree.org/crypto/storage/optimized/how-to-invest-in-crypto-featured-image.jpg","path":"crypto/storage/optimized/how-to-invest-in-crypto-featured-image.jpg","original_path":"crypto/storage/original/how-to-invest-in-crypto-featured-image.jpg","name":"how-to-invest-in-crypto-featured-image.jpg","original_name":"how-to-invest-in-crypto-featured-image.jpg","title":null,"alt":null,"width":1024,"height":576,"disk":"spaces","status":"uploaded","readable_file_size":"75.22KB"},"youtube_video":null},{"slug":"ico-vs-ido","title":"ICO vs IDO vs IEO: Which One is the 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Them?","featured_image_id":11359,"status":"published","chapter_id":7,"language":"en","order":4,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/what-is-an-airdrop","featured_image":{"id":11359,"uuid":"7b43c968-1275-4d3e-acb1-1707a43a4014","public_url":"https://assets.bitdegree.org/crypto/storage/optimized/what-is-an-airdrop-featured-image.jpg","path":"crypto/storage/optimized/what-is-an-airdrop-featured-image.jpg","original_path":"crypto/storage/original/what-is-an-airdrop-featured-image.jpg","name":"what-is-an-airdrop-featured-image.jpg","original_name":"what-is-an-airdrop-featured-image.jpg","title":null,"alt":null,"width":1024,"height":576,"disk":"spaces","status":"uploaded","readable_file_size":"66.05KB"},"youtube_video":null},{"slug":"how-to-get-free-crypto","title":"How to Get Free Crypto Assets?","featured_image_id":6542,"status":"published","chapter_id":7,"language":"en","order":5,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/how-to-get-free-crypto","featured_image":{"id":6542,"uuid":"4fceb9ab-391e-4ef9-b00d-c871a49878a3","public_url":"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto.o.jpg","path":"crypto/storage/media/how-to-get-free-crypto.o.jpg","original_path":"crypto/storage/media/how-to-get-free-crypto.jpg","name":"how-to-get-free-crypto.o.jpg","original_name":"how-to-get-free-crypto.jpg","title":null,"alt":null,"width":768,"height":478,"disk":"spaces","status":"uploaded","readable_file_size":"93.93KB"},"youtube_video":null},{"slug":"how-to-arbitrage-crypto","title":"What is Crypto Arbitrage: The Main Principles","featured_image_id":null,"status":"published","chapter_id":7,"language":"en","order":6,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/how-to-arbitrage-crypto","featured_image":null,"youtube_video":null},{"slug":"what-is-fud","title":"What is FUD: How to Use It to Your Advantage While Investing in Crypto?","featured_image_id":11394,"status":"published","chapter_id":7,"language":"en","order":7,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/what-is-fud","featured_image":{"id":11394,"uuid":"defd32c5-d3e1-4e66-9f58-e2ee316bad3a","public_url":"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-featured-image.jpg","path":"crypto/storage/optimized/what-is-fud-featured-image.jpg","original_path":"crypto/storage/original/what-is-fud-featured-image.jpg","name":"what-is-fud-featured-image.jpg","original_name":"what-is-fud-featured-image.jpg","title":null,"alt":null,"width":1024,"height":576,"disk":"spaces","status":"uploaded","readable_file_size":"65.30KB"},"youtube_video":null},{"slug":"investing-in-cryptocurrency","title":"Investing in Cryptocurrency: How to Manage Your Risks?","featured_image_id":null,"status":"published","chapter_id":7,"language":"en","order":8,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/investing-in-cryptocurrency","featured_image":null,"youtube_video":null},{"slug":"what-is-a-rug-pull-in-crypto","title":"What is a Rug Pull in Crypto?","featured_image_id":6532,"status":"published","chapter_id":7,"language":"en","order":9,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/what-is-a-rug-pull-in-crypto","featured_image":{"id":6532,"uuid":"be8043fb-078c-4487-9af9-d2d9c2b574ea","public_url":"https://assets.bitdegree.org/crypto/storage/media/what-is-a-rug-pull-in-crypto.o.jpg","path":"crypto/storage/media/what-is-a-rug-pull-in-crypto.o.jpg","original_path":"crypto/storage/media/what-is-a-rug-pull-in-crypto.jpg","name":"what-is-a-rug-pull-in-crypto.o.jpg","original_name":"what-is-a-rug-pull-in-crypto.jpg","title":null,"alt":null,"width":768,"height":478,"disk":"spaces","status":"uploaded","readable_file_size":"92.28KB"},"youtube_video":null},{"slug":"how-to-avoid-rug-pulls-in-crypto","title":"How to Spot and Avoid Rug Pulls?","featured_image_id":6555,"status":"published","chapter_id":7,"language":"en","order":10,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/how-to-avoid-rug-pulls-in-crypto","featured_image":{"id":6555,"uuid":"80cbed9d-3b4b-45d9-9a85-d2d8108c0f32","public_url":"https://assets.bitdegree.org/crypto/storage/media/how-to-avoid-rug-pulls.o.jpg","path":"crypto/storage/media/how-to-avoid-rug-pulls.o.jpg","original_path":"crypto/storage/media/how-to-avoid-rug-pulls.jpg","name":"how-to-avoid-rug-pulls.o.jpg","original_name":"how-to-avoid-rug-pulls.jpg","title":null,"alt":null,"width":768,"height":478,"disk":"spaces","status":"uploaded","readable_file_size":"111.99KB"},"youtube_video":null},{"slug":"how-to-avoid-crypto-taxes","title":"The Key Legal Techniques of Avoiding Crypto Taxes","featured_image_id":6526,"status":"published","chapter_id":7,"language":"en","order":11,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/how-to-avoid-crypto-taxes","featured_image":{"id":6526,"uuid":"1e44162c-ef1d-4010-81b4-9e8d1809aedf","public_url":"https://assets.bitdegree.org/crypto/storage/media/how-to-avoid-crypto-taxes.o.jpg","path":"crypto/storage/media/how-to-avoid-crypto-taxes.o.jpg","original_path":"crypto/storage/media/how-to-avoid-crypto-taxes.jpg","name":"how-to-avoid-crypto-taxes.o.jpg","original_name":"how-to-avoid-crypto-taxes.jpg","title":null,"alt":null,"width":768,"height":478,"disk":"spaces","status":"uploaded","readable_file_size":"99.10KB"},"youtube_video":null}]},{"id":8,"title":"Crypto Analysis","slug":"crypto-analysis","updated":null,"chapter":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters/learn-crypto-analysis.jpg","chapter_simple":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters-simple/crypto-analysis-101.jpg","rating":100,"sections":[{"slug":"what-is-bullish-and-bearish","title":"Bearish and Bullish Markets: Do They Matter?","featured_image_id":null,"status":"published","chapter_id":8,"language":"en","order":1,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/what-is-bullish-and-bearish","featured_image":null,"youtube_video":null},{"slug":"best-technical-analysis-indicators-for-crypto","title":"5 Best Crypto Technical Analysis Indicators You Must Know About","featured_image_id":null,"status":"published","chapter_id":8,"language":"en","order":2,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/best-technical-analysis-indicators-for-crypto","featured_image":null,"youtube_video":null},{"slug":"what-is-candlesticks","title":"Technical Analysis: What are Candlesticks, Trendlines, and Patterns?","featured_image_id":null,"status":"published","chapter_id":8,"language":"en","order":3,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/what-is-candlesticks","featured_image":null,"youtube_video":null},{"slug":"how-to-track-new-crypto-coins","title":"Crypto Tracking: How to Track Your Favorite Coins & Tokens?","featured_image_id":null,"status":"published","chapter_id":8,"language":"en","order":4,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/how-to-track-new-crypto-coins","featured_image":null,"youtube_video":null},{"slug":"how-to-research-crypto","title":"Crypto Research Fundamentals & Social Signals: Your Daily Trading Strategy","featured_image_id":null,"status":"published","chapter_id":8,"language":"en","order":5,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/how-to-research-crypto","featured_image":null,"youtube_video":null}]},{"id":9,"title":"Mining","slug":"mining","updated":false,"chapter":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters/learn-crypto-mining.jpg","chapter_simple":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters-simple/crypto-mining-101.jpg","rating":80,"sections":[]},{"id":10,"title":"Crypto Terms","updated":false,"chapter":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters/crypto-101-glossary.jpg","chapter_simple":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters-simple/crypto-glossary-101.jpg","rating":100,"sections":["A","B","C","D","E","F","G","H","I","J","K","L","M","N","O","P","Q","R","S","T","U","V","W","X","Y","Z"]}],"nextSection":{"id":561,"original_id":null,"author_id":42,"translator_id":null,"title":"What is On-Balance Volume (OBV)?","slug":"what-is-on-balance-volume-obv","section":"O","keyword":"On-Balance Volume (OBV)","status":"published","definition":"a technical indicator that uses volume flow to predict an asset's price fluctuations.","content":"<p>On-Balance Volume (OBV) is a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-are-technical-indicators/">technical indicator</strong></strong></a> that predicts the fluctuations of an asset's price using volume flow. It is a compounding indicator that measures purchasing and selling pressure by adding <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-volume/">volume on up days and subtracting volume on down days.</p>\n<p>When an asset's price closes higher than the previous close, the full day's volume is referred to as up-volume. However, when the asset's price ends lower than its prior close, the volume is called <strong>down-volume</strong>.</p>\n<p>Note that OBV only generates volume on markets that have exchange volume, just like other volume-based indicators like <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-money-flow-index-mfi/">MFI, <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-negative-volume-index-nvi/">NVI, the <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-klinger-oscillator/">Klinger oscillator</strong></strong></a>, and so on.</p>\n<p>OBV metric was founded by Joseph Granville. He argues that volume determines how financial markets operate, and that price changes are mostly determined by it. If the <strong>market volume of an asset increases</strong> dramatically, he believes that the price is about to see a large spike (upwards or downwards).</p>\n<p>The OBV can be determined based on the closing price:</p>\n<ul>\n<li>OBV = Previous OBV - Current Day&rsquo;s Volume &ndash; <em>when the closing price for the past 24 hours is lower than the previous closure price.</em></li>\n<li>OBV = Previous OBV &ndash; <em>when the closing price for the past 24 hours is equal to the previous closing price.</em></li>\n<li><strong>OBV = Current Day&rsquo;s Volume + Previous OBV</strong> &ndash; <em>when the closing price for the past 24 hours is above the previous closing price.</em></li>\n</ul>\n<p>Though note that the absolute OBV is not important because the OBV line will determine the market trends.</p>\n<p>Here are the steps of using the OBV to determine asset&rsquo;s price fluctuations:</p>\n<ul>\n<li>Define the trend for OBV.</li>\n<li>Check whether the <strong>present trend</strong> is in line with the underlying asset's trend.</li>\n<li>Find and mark the levels of support and resistance.</li>\n<li>When the OBV lines you've made break through their resistance levels, <strong>accurate signals</strong> that indicate whether the asset&rsquo;s price is moving upwards or downwards.</li>\n</ul>\n<p>Note that closing prices are important to consider when searching for resistance breaks. Besides, keep in mind that due to large volume spikes, the OBV indicator can become ineffective for a period of time. If this happens, you should <strong>wait for the end of the settling period</strong> (the time between the trades when an order is being processed).</p>\n<p>Furthermore, divergence signals can predict a trend reversal in either a bullish or bearish direction. They are predicated on the principle that <strong>volume always takes precedence over price</strong>. As a result, a bearish divergence is established when OBV falls or closes lower than its prior low. On the other hand, a bullish divergence occurs when OBV increases and closes at a higher price than the prior close.</p>\n<p>However, it's vital to remember that <strong>OBV alone isn't sufficient for accurately predicting bearish and bullish trends</strong>. For this type of research, additional technical indicators like <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-moving-average-convergence-divergence-macd/">MACD or <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-relative-strength-index-rsi/">RS&nbsp;should be used.</p>","level":"medium","meta_title":"What is On-Balance Volume (OBV)? Definition & Meaning | Crypto Wiki","meta_description":"On-Balance Volume (OBV) meaning: On-Balance Volume (OBV) - a technical indicator that uses volume flow to predict an asset's price fluctuations.","meta_keywords":null,"language":"en","created_at":"2022-03-24T06:44:05.000000Z","updated_at":"2022-05-13T14:32:23.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-on-balance-volume-obv"},"prevSection":{"id":543,"original_id":null,"author_id":40,"translator_id":null,"title":"What is Off-Ledger Currency?","slug":"what-is-off-ledger-currency","section":"O","keyword":"Off-Ledger Currency","status":"published","definition":"a type of digital currency that is minted outside of a blockchain ledger yet is still accepted and used.","content":"<p>All currencies that do not operate on the <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-blockchain/">blockchain or other <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-distributed-ledger/">distributed ledgers</strong></a> are referred to as off-ledger currencies. Even though an off-ledger currency is not designed particularly to be used with a blockchain, it can be utilized on one due to its functionality and widespread acceptability.</p>\n<p>Different from an <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-on-ledger-currency/">on-ledger currency</strong></a>, an off-ledger currency<strong> doesn&rsquo;t require</strong> <strong>continuous computational power to exist</strong>. Because of their stability and popularity, certain off-ledger currencies are digital <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-fiat/">fiat equivalents (such as USD or EUR) that are used on blockchains.</p>\n<p>In addition, since their value is still derived from off-ledger currencies, <strong>fiat-based</strong> <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-stablecoin/">stablecoins (tokens tied to the value of nation-state currencies) might also fall within the concept of off-ledger currencies.</p>\n<p>Wondering <strong>where can you store off-ledger currencies</strong>? Well, talking about fiat-based stablecoins, you can either store them on a hardware crypto wallet like <a href=https://www.bitdegree.org/"/crypto/goon/ledger-nano-x/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Ledger Nano X</strong></a> or a software crypto wallet like the <a href=https://www.bitdegree.org/"/crypto/goon/binance/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>built-in Binance wallet</strong></a>.</p>\n<p><strong>Fiat money is a great illustration of an off-ledger currency</strong> since it is produced by central banks outside of blockchain networks. The United States dollar (USD) is a prominent example of an off-ledger currency because of its value and worldwide popularity. It is often held as a reserve currency by most financial organizations. In contrast to on-ledger currencies, it is centrally regulated and issued without restrictions.</p>\n<p>In regards to that, <strong>off-ledger currencies lack</strong> <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-intrinsic-value/">intrinsic value</strong></a>. Instead, their worth is determined by the government's support and subsequent designation as legal tender. The ability of central banks to issue and control fiat money gives them complete control over the economy. Unfortunately, bad actors can still counterfeit them. And, if their issuance is unregulated, they can have negative economic consequences.</p>","level":"easy","meta_title":"What is Off-Ledger Currency? Definition & Meaning | Crypto Wiki","meta_description":"Off-Ledger Currency meaning: Off-Ledger Currency - a type of digital currency that is minted outside of a blockchain ledger yet is still accepted and used.","meta_keywords":null,"language":"en","created_at":"2022-03-23T14:55:41.000000Z","updated_at":"2023-05-08T06:33:32.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-off-ledger-currency"},"currentChapter":"O","currentSection":"what-is-off-chain-governance","chapterTitle":"O","readingLevel":"medium"},"url":"/crypto/learn/crypto-terms/what-is-off-chain-governance","version":"cdd198d50cbe5c9c21c9329d7c096ffc"}" class="container-fluid d-flex crypto-book p-0">
Handbook Cover Page
Crypto Terms: Letter O

What is Off-Chain Governance?

Off-Chain Governance MEANING:
Off-Chain Governance - is a blockchain governance model that allows every stakeholder to have a say in public blockchains' decision-making via collaboration.
Medium
2 minutes

Let's find out Off-Chain Governance meaning, definition in crypto, what is Off-Chain Governance, and all other detailed facts.

When an Off-Chain Governance is established, public blockchain stakeholders challenge one another for control by trying to persuade the majority to join and promote their cause. Thus it has similarities with how politics work in real life. Stakeholders promote their interests via collaboration platforms like social media and forums, or during events, conferences, and other gatherings.

Off-chain governance network tries to consider everyone’s interests, but the power of decision-making mostly fluctuates between the core development team members and miners.

The most popular blockchain platforms like Bitcoin or Ethereum use their own off-chain governance variation. For example, Bitcoin users don’t receive any inherent voting rights just by owning BTC since Bitcoin hasn’t introduced an on-chain governance network or governance tokens. The possession of BTC can only do so much, such as make your voice heard in off-chain conversations.

Moreover, it doesn’t matter how many blocks a Bitcoin miner has verified, that mining power does not translate to governance power. It’s important to note that no matter what hash rate percentage you reach when mining, you won’t be rewarded with governance rights. Your responsibility for verifying and adding transactions to the blockchain always stays the same just like the type of rewards you receive.

Before any major changes are implemented within Bitcoin or Ethereum, the proposal is discussed by the crucial members of the platform. They include the members of the core development team, miners, researchers, and end-users. In addition, Bitcoin allows anyone to attend its core development team’s online meetings.

Ethereum also governs its platform in a similar fashion as Bitcoin. Vitalik Buterin who is often considered the crypto hero is in charge of the core development team of Ethereum. 

The process of making important decisions off-chain starts much as it does on-chain.  The core development team brings forward a formal proposal for implementing new code like Bitcoin improvement proposal (BIP) or Ethereum improvement proposal (EIP) which basically are improvement suggestions. In the latter cases, they’re held in the project’s official repository on Microsoft or GitHub.

Then stakeholders come together to discuss the proposal and express their approval or disapproval of it. It’s much like game theory. 

Node operators, also known as validators, and miners are consulted to find out whether they approve of upgrading the software. If everyone approves, then the code is implemented without a hassle. Although it almost never goes that smoothly. 

Each major update is announced in advance in order to keep the developers and stakeholders on the same page.

Now, in case of disagreement between stakeholders, there are two possible courses of action:

  • Try to change the opinion of stakeholders by using persuasion techniques to bring the other stakeholders around;
  • Don’t try to change the stakeholders' opinions. Instead, enforce the hard fork protocol. This way they’re able to make relevant and agreed-upon changes.
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